Fourth Quarter Guidance
Q: Why is Q4 guidance conservative compared to current run rates?
A: Management explained that the fourth quarter is seasonally softer due to ship repositioning and the end of the more productive summer vacation period for North American school holidays. " They expect the implied EBITDA margin for Q4 at the midpoint to be 11.9%, close to what was delivered in the first and second quarters. " The guidance allows for potential promotional activities if needed during these repositionings. "

Dividend Strategy
Q: How will you balance dividend growth with debt paydown?
A: They emphasized a balanced approach, comfortable carrying some debt with net debt well below 1 turn. " They will allocate capital between share repurchases, debt paydown, and the newly announced dividend. " Opportunities to grow the dividend exist, and interest rates will influence how aggressively they pay down debt. "

Product Margin Expansion
Q: What are the drivers of product margin, and how high can it go?
A: Improvements in product margin are due to onboard initiatives and reduced discounting, not from Medi-Spa service attachments. " Despite no longer owning Elemis, they have a long-term supply agreement with fixed costs. " The biggest driver is continued productivity improvements. "

Technology Enhancements
Q: Can you discuss tech enhancements and AI investments?
A: They have not rolled out any AI enhancements yet; these are still in early development stages. " They're identifying opportunities onboard and in back-office operations. " Current productivity gains are due to menu simplification and increased guest numbers. "

Pre-Booking Opportunities
Q: What's the opportunity for increasing pre-booking penetration in 2025?
A: Pre-booking is expected to rise as they onboard more brands and enhance the pre-booking experience. " Currently, pre-booking penetration is 23%. " By providing more content and improving the journey, they believe pre-booking will move upwards. "

Occupancy Levels
Q: Can increased occupancy drive growth beyond ship count?
A: Occupancies are back to historical levels, sometimes surpassing 100%, often due to additional children onboard who are not their target customers. " Therefore, the marginal increment from higher occupancy is not significant for their services. "

Spa Menu Pricing
Q: Is there room to raise spa menu prices above U.S. resort levels?
A: They benchmark pricing against high-end land-based resorts but remain value-oriented. " There may be an opportunity to take further pricing in 2025 as part of the budgeting process. "

E-commerce and Product Lines
Q: Any plans to expand product lines or e-commerce business?
A: They see no need to add new product lines, as Elemis's lineup suffices for growth. " They continue to sell Elemis products online and are exploring ways to expand e-commerce, but nothing specific is planned currently. "

Demographic Targeting
Q: How do different cruise demographics impact your business?
A: They adapt to various demographics across different cruise offerings. " Royal Caribbean's strategy of offering family cruises (Icon) and shorter, party cruises (Utopia) is seen as smart. " They have extensive experience handling various cruise types and don't foresee challenges. "

Product Spend Trends
Q: How is product spend trending post-treatment?
A: Product and service demand remain very strong. " Retail attachments are performing well, with room for improvement as they simplify menu choices, which promotes better retail attachment. "